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WHY PVR TECHNOLOGY IS GOOD FOR MARKETERS

Changing the Marketing-Entertainment Dynamic Benefits Everyone

All the sturm und drang around personal video recorders should come as no surprise to readers of this column, who were warned more than three years ago that PVRs meant "treacherous times ahead for programmers and the marketers that depend on them." But let's parse the warning a little more carefully. In fact, TiVo and other PVRs are a boon to marketers. It's only the broadcast networks that are in trouble.

TV commercials. You read that right. It's good news. Marketers have needed some form of tough love to wean them from "spot-centric" marketing -- a reflexively easy strategy for companies to follow, but one premised on waste, appropriate perhaps when markets are immature and growing exponentially (as in the two decades after World War II) but not for mature markets in times of stress.

Return on investment
Marketers know it. As this magazine reported in its lead story on Oct. 13, an exclusive Ad Age survey supported by the Association of National Advertisers found that "media advertising does the worst job of any marketing discipline in proving return on investment and network TV is the worst of those media."

But PVRs are good news for positive reasons as well. They change the marketing-entertainment dynamic in a way that can benefit both marketers and consumers. Because PVRs can be used to bring programming -- and even entire "micro-networks" -- to audiences, marketers can collaborate directly with entertainment companies to craft and deliver offerings to specific segments, without having to give pieces of the pie away to mere intermediaries. Such PVR programming (first posited in this space on Oct. 16, 2000) has advantages broadcasting cannot match: It is opt-in, and it is measurable -- the reasons behind Coca-Cola Co.'s decision, disclosed earlier this month, to offer an original, 25-minute music program to TiVo subscribers.

Embedded PVRs
Similar announcements will likely become familiar in the months to come as cable and satellite TV operators roll out the newest generation of set-top boxes with PVRs embedded. (If Coke can distribute its own music programming, why can't Progresso do an Italian cooking show, or Gillette send the Rugby Channel directly to viewers?) This fall, Time Warner -- the largest media company without a major broadcast TV network to protect -- entered the fray, rolling out the new Scientific Atlanta 8000 box in New York and other cable markets. Because of this development, analysts now estimate PVRs will be in one-quarter of TV households within four years.

With PVR penetration increasing, marketers will certainly benefit as they shift budget from wasteful broadcast commercials to the higher-impact, more quantifiable format. Cable TV networks are not likely to suffer, and may reap some rewards: Already better versed than broadcasters in developing and delivering segmented offerings, and more accustomed than broadcasters in crafting marketing solutions for their customers, they may find PVR marketing programming another outlet for their skills.

The real losers
The only real losers, from this vantage point, will be broadcast networks. Not only will they be hurt broadly by the migration of marketng programs to PVRs and other measurable venues, they will lose some of the structural advantages that sustained them during broadcasting's 40-year heyday.

Chief among these disappearing supports: the predictable audience flow from one program to another, which allowed a single hit show to anchor an entire evening otherwise filled with barking dogs.